It has been a long time coming, but the issue of how the US Medicare and Medicaid system sets the fees it pays doctors, and hence sets the incentives on doctors that drive their health care decisions, finally got some public attention again.

The background is complex, and may glaze the eyes of readers hoping for simple solutions to simple problems. One wonders if the complexity was deliberately created to discourage solutions. Yet we have created a complex, obscure, opaque health care system. If we want to meaningfully improve it, we must address its “inside baseball” qualities. Those already familiar with and interested in the topic, skip the following section.

Since 1991, Medicare has set physicians’ payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians’ pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients’ values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.

As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. The RUC is a private committee of the AMA, touted as an “expert panel” that takes advantage of the organization’s First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments.

However, the identities of RUC members were opaque for a long time, and the proceedings of the group are secret. As Goodson(2) noted, RUC “meetings are closed to outside observers except by invitation of the chair.” Furthermore, he stated, “proceedings are proprietary and therefore not publicly available for review.”

In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.

That changed in October, 2010. A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (alsoreprinted by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its “secretive” nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.

In 2011, after the “Replace the RUC” movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed. It was relatively easy for me to determine that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).

Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel. It appeared that things might change. However, it was not to be. A judge dismissed the lawsuit in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates. The ruling did not address the legality of the relationship between the RUC and the federal government. And then everything was quiet again, until….

A Senate Committee Takes Up the RUC

Meanwhile, after the attempt at health care reform made by the Affordable Care Act (aka “Obamacare”), which aimed to increase insurance coverage, there has been growing concern that there will not be enough primary care physicians available to manage the larger insured patient population. So, as reported by the Washington Times, a US Senate committee published a report on this issue:

The United States needs 16,000 more primary care physicians to meet its current health care needs, a problem that will only get worse if nothing is done to accommodate millions of newly-insured residents under President Obama’s health care law in the coming decade, according to a Senate report released Tuesday.

Mirable dictu, the report cited the influence of the RUC as part of the problem:

Mr Sanders said some of the blame appears to rest with a board of 31 physicians who make reimbursement recommendations to the Centers for Medicare and Medicaid Services (CMS), which private insurers frequently adopt as well.

The American Medical Association’s Relative Value Scale Update Committee, or RUC, is populated by many more specialists that primary care physicians, multiple witnesses said Tuesday.

‘Therefore, it should come as no surprise that it has accelerated higher payments — larger paychecks — to specialists over primary care doctors,’ Mr Sanders’ report said.

Senator Sanders’ subcommittee then held a hearing during which the RUC came up for more criticism, as reported by MedPage Today:

Sanders noted that the RUC is dominated by specialists, whose opinions are accepted by Medicare more than 90% of the time.

‘Specialists sitting on the committee determine reimbursement rates,’ he said during the hearing on the physician shortage that is anticipated as more people become insured under the Affordable Care Act (ACA). ‘We have to look at that.’

Several witnesses identified problems with the RUC:

Andrew Wilper, MD, acting chief of Medicine at the Department of Veterans Affairs Medical Center in Boise, Idaho, told the senators that Congress could mandate further oversight of the RUC and create greater separation between physicians and the boards that dictate their payment rates.

‘At a minimum, the public deserves transparency in decision making from the RUC,‘ Wilper said. ‘We should set a process for rate-setting that is not encumbered by conflicts of interest and is not favoring specialties. A rational observer might conclude that the federal government and AMA are plotting to bring an end to the primary care workforce in the U.S.‘

Also Modern Healthcare reported (subscription required) that Dr Wilper

described the RUC as ‘a secretive group of physicians that wield tremendous influence.’

Furthermore,

Uwe Reinhardt, economics professor at Princeton University, said in addition to adding primary care physicians to the RUC, the panel needs a third party to perform outside audits of the AMA panel’s recommendations

However, the AMA was there to provide their usual defense of the RUC, as per Medpage Today,

‘The RUC is an independent group of physicians from many specialties, including primary care, who use their expertise on caring for Medicare patients to provide input to CMS [the Centers for Medicare and Medicaid Services],’ RUC chair Barbara Levy, MD, said in a statement. ‘More than 300 people participate in a typical RUC meeting and information on the panel is publicly available.’

Levy noted that ‘CMS recently adopted RUC recommendations for the creation of codes to recognize the value of the work, often done by primary care providers, in transitioning patients from one care setting to the next.’

The AMA also added two primary care-related seats to the RUC last February: a representative from the American Geriatrics Society and a rotating seat for a practicing primary care physician.

Note that this brief response did not add anything to the more voluminous response the AMA made in 2009 to some of my posts on the RUC, all of which were easily countered (look here).

After the hearing, per MedPage Today,

The problems with the RUC are ‘one of the more important issues that arose out of this hearing,’ Sanders told MedPage Today after it was over. ‘I don’t think we have the transparency we need.’

Legislation to address the RUC — as well as other factors exacerbating the PCP shortage — is expected to come ‘quickly’ said Sanders.

Comments
I salute Senator Sanders and his subcommittee for addressing the obscure and often quite anechoic topic, getting it some public attention, and at least raising the possibility of a legislative solution.

However, this is just a baby step. The hearing and report generated minimal media coverage (I included links to the most visible above). Given that Senator Sanders is widely regarded as well to the left of most of his legislative colleagues, the likelihood that any measure he would craft on this would be passed is minimal.

Meanwhile, questions we have raised again and again, most recently here in 2011, remain unanswered.

How did the government come to fix the payments physicians receive? Government price-fixing has not been popular in the US, yet this has caused no outcry.

Why is the process by which they are fixed allowed to be so opaque and unaccountable? Why are there no public hearings on the updates, and why is there no input from practicing physicians or organizations other than those related to the RUC?

How did the RUC become de facto in charge of this process?

Why does the AMA [keep the membership of the RUC so opaque, and] give no input into the RUC process to its general membership?

Why is the RUC membership so dominated by procedural specialists? Why were primary care physicians, who made up at least a sizable minority of physicians when the update process was started, not represented according to their numbers?

Why has there been so little discussion of the RUC and its responsibility for an extremely expensive health care system dominated by high-technology, expensive, risky and invasive procedures?

Economists have beaten us over the head with idea that incentives matter. The RUC seems to embody a corporatist approach to fixing prices for medical services to create perverse incentives for physicians to do more procedures, and do less conversing with and examining patients, examining the best clinical research evidence about their problems, and rigorously thinking about how best to help them. More procedures at higher prices helps physicians who do procedures. It may help even more the corporations that provide the devices and drugs whose use is necessitated by such procedures, and the hospitals who can charge a lot of money as sites for performance of procedures. It may even help insurance companies by driving ever more money through the health care system, and thus allow rationalization for higher administrative expenses as a function of overall money flow.

Yet incentives favoring procedures over all else may lead to worse outcomes for patients, and more costs to patients and society. If we do not figure out how to make incentives given to physicians more rational and fair, expect health care costs to continue to rise, while access and quality continue to suffer.

Specialist-PCP Hourly Earnings Under MFS

Read This First! Why Did We Develop This Site?

This site has been developed - see here for our backgrounds - to help primary care physicians and other interested individuals obtain verifiable background from reputable sources on:

The evolution and structure of the US' medical payment system.

How it came to devalue primary care and favor specialty services.

How that has translated to lower quality care at far greater expense in the US.

We believe the overwhelming majority of American primary care physicians are deeply frustrated with the differences in how primary and specialty care are valued by the current system, and the havoc that system has wrought throughout health care and the nation.

The first step to remedying this situation is for the primary care medical societies to visibly and loudly withdraw from participation in the RUC, de-legitimizing the process.

That said, this effort is most decidedly NOT primarily about getting primary care physicians more money, but bringing our health system back into homeostasis.

Together, perhaps we can facilitate a process to replace the RUC with a more balanced, independent advisory panel to the Centers for Medicare and Medicaid Services (CMS).

Then the next step would be to urge replacement of the current, highly jiggered reimbursement methodology, the Resource-Based Relative Value Scale (RBRVS), with another approach that is more modern, enlightened and focused on value. We believe that a core principle of a revised payment system is payment parity for management of complexity.

This is likely to be a process that takes time, so we'll update this site daily to reflect the latest information. Please visit often to stay in touch. And if you think this is important and worthwhile, please pass this site along to your colleagues.